Oct 17, · Today, bitcoin serves as the intermediary asset on a number of crypto investment platforms if you want to purchase a less-common token (i.e., anything not named Ethereum or . Investment in Bitcoin is quick and completely profitable as there is no involvement of central authorities like banks. On the other hand, investment in traditional stocks at the banks involves several parties, and the bank takes away a part of the interest. It is also very . Dec 07, · Bitcoin is borderless and global Bitcoin is open to everyone and provides an exciting opportunity to delve into an entirely new asset class. Investing in bitcoin may seem scary, but know that it takes time and effort to understand how Bitcoin works. Also keep in mind that the regulatory perspectives on Bitcoin globally are varied.
Bitcoin as investment option5 Things to Know Before Investing in Bitcoin ( Updated)
Traditional banking stock is not volatile, which means that there is no scope of securing extra profits on the investment. Investment in Bitcoin is quick and completely profitable as there is no involvement of central authorities like banks. On the other hand, investment in traditional stocks at the banks involves several parties, and the bank takes away a part of the interest.
It is also very time-consuming, and the yield is not so high either. As Bitcoin is decentralized, it is unaffected by governmental control. The ongoing pandemic has not adversely affected Bitcoin investment and transactions. There cannot be any devaluation of Bitcoin because of the absence of governmental control.
Such is not the case when it comes to traditional banking, which is heavily regulated by the government. The very nature of Bitcoin ensures that there can be no fraud. The Blockchain technology verifies every transaction and maintains a record of the transactions in the form of blocks. There cannot be any tampering or reversal of transactions. Traditional banking involves a great degree of fraudulence.
There can be counterfeit of currencies, bank failure, and other such incidents that incur losses for the investor. The topnotch security mechanism of Bitcoin paired with two-factor authentication, makes sure that every transaction is verified and validated without any leakage of user information.
Bitcoin enthusiasts do not shy away from referring to Bitcoin as digital gold. Here are the few differences between Bitcoin and gold:.
From the perspective of investment and taking the recent financial scenario into consideration, it seems that Bitcoin is more profitable than traditional banking and gold. Only 21 million bitcoin tokens can be mined, which creates a level of scarcity that pushes up the value of these digital tokens. Another reason bitcoin has done so well is the expectation of a digital revolution.
This is to say that bitcoin buyers believe the utility of paper money has come and gone. This could prove somewhat accurate with the pandemic highlighting the potential for physical cash to be a carrier of harmful germs. With the rise of peer-to-peer payment platforms, bitcoin looks to become the superior digital currency. Bitcoin also benefits from its first-mover advantage in the cryptocurrency space. It was the first digital token to catch on with investors, and happens to be the largest on a market-cap basis by a significant amount it's five times the size of Ethereum, the second-largest cryptocurrency by market cap.
Today, bitcoin serves as the intermediary asset on a number of crypto investment platforms if you want to purchase a less-common token i. But as good as bitcoin has been for investors in , my blunt opinion is that it's a terrible investment. Here are 10 reasons you should avoid bitcoin like the plague. First of all, bitcoin is only as scarce as its programming dictates. Whereas physical metals, such as gold, are limited to what can be mined from the earth, bitcoin's token count is limited by computer programming.
It's not out of the question that programmers, with overwhelming community support, could choose to increase bitcoin's token limit at some point in the future. Thus, bitcoin offers the perception of scarcity without actually being scarce. The king of cryptocurrencies also has a utility problem. To date, only Even considering the fact that fractional token ownership exists, roughly 10 million to 11 million tokens in circulation aren't going to go very far.
There's minimal utility here. Bitcoin may enjoy first-mover advantage at the moment, but the barrier to entry in the cryptocurrency space is especially low.
All it takes is time and coding knowledge for blockchain -- the digital and decentralized ledger that records transactions -- to be developed and a digital token to be tethered to the network.
There's nothing unique about bitcoin's underlying blockchain that other businesses couldn't one-up. Another beef with bitcoin is that there's no tangible way to value it as an asset. For instance, if you want to buy shares of a publicly traded company, you can scour income statements, its balance sheet, read about industrywide catalysts, and listen to management commentary from recent conference calls and presentations.
In other words, you can make an informed decision. With bitcoin, there is no tangible data for investors to wrap their hands around. There's transaction settlement times and total circulating token supply, but neither of these figures tells us anything about the value or utility of bitcoin.
I believe investors are also placing their faith in the wrong asset. Over the long term, blockchain technology is where the real value lies. Blockchain can be used to reinvent supply-chain management and expedite overseas payments. But when folks are buying into bitcoin, they're gaining ownership in digital tokens with zero ownership of the underlying blockchain. To build on this point, companies are also testing blockchain that's tethered to fiat currencies. A sixth issue is that blockchain is still years away from gaining real relevance.
Three years ago, when blockchain companies and cryptocurrency stocks were the hottest thing since sliced bread, it was expected that blockchain technology would be quickly adopted. Little did investors foresee the Catch that would arise. Specifically, no businesses are willing to make the costly and time-consuming switch to blockchain without the technology being broadly tested -- yet companies aren't willing to make this initial leap to test the technology and prove its scalability.
By no means are cryptocurrencies the only asset to be hacked by thieves, but there are serious fraud and theft concerns that accompany bitcoin.